Accounts Payable – The Core of Your Digital Transformation
Digital Transformation is not an easy task. In fact, according to McKinsey, 70% of all company-wide transformation projects fail. The culprits? Scattered data, inefficient workflows and, last but not least, siloed processes. In other words, digitalization fails because many companies focus on isolated tasks and ignore the bigger picture.
It has now become clear that digital transformation is not an on/off issue, but a complex organizational process that requires both internal and external change. Most companies find it useful to start the digital transformation in the finance department, specifically with the Accounts Payable process. This is a process that, as we pointed out in the past, is responsible for all financial transactions between the company and its suppliers.
In fact, a recent Ardent Partners study has revealed that a majority of businesses consider the AP process to be either valuable or exceptionally valuable to their company.
Since the AP department is instrumental to operational success it’s no wonder so many companies focus their efforts in its direction. But what about results?
What the Best-in-Class Do
The same Ardent study also gives us a glimpse on what the best in class can achieve in terms of accounts payable automation: the rift between those advanced in automation (Best-in-Class) and the rest is quite large, on a number of KPIs:
The American Productivity and Quality Center (APQC) found similar numbers in a 2018 study, with the top percentile of companies paying little over 2 dollars per invoice, while the bottom one pay over 10 dollars per document!
We’ve seen similar numbers over countless projects. So, what’s our secret? How can you beat the best AP automation providers?
1. Automate an ecosystem, not just a process
Within the same study, Ardent Partners noticed that while common tasks such as invoice-processing were the focus of many providers (and, therefore, heavily automated) supplier management was completely omitted for more than 54% of the companies. The same went for other supplier-related tasks such as early payment discounting.
As valuable as Accounts Payable automation might be, without an equally efficient Order-2-Cash system to help suppliers automate their end, KPIs such as invoice processing time will remain high.
To fight such delays, we’ve created a rapid onboarding process that allows us to get over 90% suppliers on board. Regardless of its features, no platform can achieve optimum efficiency without both parties collaborating!
Another barrier to creating a seamless experience is that suppliers are often less structured than large buyers, with their data scattered over countless formats and software solutions.
This is why a crucial mantra for our product development team is compatibility. Our product suite is currently compatible with over 200 accounting and ERP software and the number grows by the month!
Thus, we are able not only to automate your internal processes but align and automate your suppliers’ processes, too. It’s an end-to-end approach that benefits the entire ecosystem.
2.Manage exceptions, inside and outside the company
Ardent Partners calls invoice exceptions “the root of all evil” and it’s really hard to disagree. Invoices are fragile financial documents, prone to incomplete, erroneous, or missing information.
This is why checking just for “casual” errors such as format errors or missing numbers is not enough. Docprocess’ end-to-end approach involves checking the state of the invoice from its creation to the final stages of its journey (the client approval).
To support this, we’ve implemented a system that relies on several pillars:
- Master data harmonization – there’s no use implementing invoice controls if product master data is not treated as a common reference for both suppliers and buyers. For one of our customers, over 35% of invoices had such product discrepancies, delaying invoice approval times by weeks!
- N-Way matching for PO invoices – matching is essential for spend management compliance and for identifying and correcting invoices.
- Approval workflows for non-PO invoices – some types of invoices do not have POs. While we advise that you implement POs even for services or recurring expenses in order to bring as much spend under control, this is not always possible. For invoices without a PO, our solution has approval workflows that can be customized according to your requirements.
- Real-time document controls – with over 150 document control rules, our platform can perform real-time invoice checks automatically, requiring no involvement whatsoever from your AP staff. What’s more, all this happens before any document reaches your SAP.
3. Provide supporting platforms for your AP automation
Now that we’ve convinced you AP automation has a huge impact on your business plan, it’s worth saying that, while invaluable, AP automation is not the same thing as digital transformation.
The latter should be thought of as a series of concentric processes and applications, all focused on streamlining your internal and external business relationships.
For example, having a large number of transactions (whose invoices are processed by your AP platform) generally involves also having a large number of contracts. In order to manage their lifecycle and enforce contractual terms you need a contract management solution.
To keep track of additional documents and gain valuable insights from your AP, a digital registry and mailroom with reporting capabilities should be in use. The same goes for storing your documents in a secure and legally compliant fashion, a feat that can be achieved through a digital archive.
This is why we’ve developed our offer around DocXchange, our main platform, naturally adding services as our clients’ businesses developed.send our consultants an e-mail! We’ll be more than happy to assist you!In conclusion, to make the best of your AP automation, you need an integrated ecosystem, good exception management, and supporting platforms. If you need more details on how to implement this advice, or if you need someone to do it for you, just